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Accrued interest [Investments]

Interest due from issue date or from the last coupon payment date to the settlement date. Accrued interest on bonds must be added to their purchase price.

All-Ordinaries Index (AOI) [Investments]

A value-weighted index compiled by the Stock Exchange of Hong Kong based on all common stocks listed there.

All Risks [Insurance]

This is a slightly misleading name for the types of insurance which provide wide cover but nevertheless contain a number of exclusions depending on the risks. In other words, the term "all risks" should not be taken literally, but policy wordings should be read thoroughly.

Amortisation [Loans]

Payment of debt in regular instalments of principal plus interest, as opposed to interest-only repayments.

Amortisation period [Loans]

The number of months it will take to repay a loan completely. The maximum period is usually 25 years for a home mortgage.

Annual Percentage Rate (APR) [Loans]

A measure of the cost of the loan including interest and fees, expressed as a yearly percentage rate.

Annuity [Insurance]

  • A series of periodic payments.
  • A policy under which an insurance company promises to make a series of periodic payments to a named individual or joint individuals in exchange for a single premium or a series of premiums.


Anti-Spyware Program [Security & Fraud]

Anti-spyware programs are designed to protect your computer from spyware (see under 'S'), and are useful in ensuring that your computer and your personal details remain secure.

Anti-Virus Software [Security & Fraud]

Anti-virus software is designed to detect known incoming viruses (typically via email) and prevent them from infecting the PC. New viruses can spread very quickly, so you should ensure that your anti-virus software is always running and is updated on a regular basis – at least weekly. Popular sources for anti-virus protection software are McAfee, Symantec (Norton) and Sophos. Private individuals can also download free versions of this type of software from the Internet.

Arbitrage [Investments]

Buying a financial instrument in one market in order to sell the same instrument at a higher price in another market.

Ask Price [Investments]

The lowest price at which a dealer is willing to sell a given security.

Asset-Backed Securities (ABS) [Investments]

A type of security that is backed by a pool of bank loans, leases, and other assets. Most ABS are backed by auto loans and credit cards - these issues are very similar to mortgage-backed securities.

Assets [Loans]

What you own, including the value of your property, cash, securities etc.

At-the-money [Investments]

The exercise price of a derivative that is closest to the market price of the underlying instrument.

Automatic Order Matching and Execution System (AMS) [Investments]

The automated trading system employed by the Stock Exchange of Hong Kong for the matching and execution of transaction in listed securities.

Average [Insurance]

Maintenance of a full sum insured and therefore adequate contribution or premium to the insurer is of vital importance. The system of average penalises under insurance and makes the insured his own insurer for the under-insured portion of a risk. Most property and pecuniary policies are now subject to Average.

Average condition [Insurance]

A condition in a non-marine property policy whereby, if the property value insured at the time of the claim is less than the refurbishment value, then the insured person's claim will be reduced proportionately.

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Basis Point [Investments]

One hundredth of 1%. A measure normally used in the statement of interest rate eg, a change from 5.75% to 5.81% is a change of 6 basis points.

Bear Markets [Investments]

Unfavourable markets associated with falling prices and investor pessimism.

Beneficiary [Insurance]

The person or party, the owner of an insurance policy names, to receive the policy benefit if the event insured against occurs.

Betterment [Insurance]

Used to describe an improvement in the insured property under a contract of indemnity resulting from its refurbishment or repair.

Bid-ask Spread [Investments]

The difference between a dealer's bid and ask price.

Bid Price [Investments]

The highest price offered by a dealer to purchase a given security.

Blue Chips [Investments]

Blue chips are unsurpassed in quality and have a long and stable record of earnings and dividends. They are issued by large and well-established firms that have impeccable financial credentials.

Bond [Investments]

Publicly traded long-term debt securities, issued by corporations and governments, whereby the issuer agrees to pay a fixed amount of interest over a specified period of time and to repay a fixed amount of principal at maturity.

Book Value [Investments]

The amount of stockholders' equity in a firm equals the amount of the firm's assets minus the firm's liabilities and preferred stock.

Broker [Investments]

Individuals licensed by stock exchanges to enable investors to buy and sell securities.

Brokerage Fee [Investments]

The commission charged by a broker.

Bull Markets [Investments]

Favourable markets associated with rising prices and investor optimism.

Burglary [Insurance]

Usually refers to theft involving forcible or violent entry to or exit from the premises, and is more restrictive than Full Theft cover. If you have a Burglary policy you should check the extent of cover actually provided to make sure it meets your needs.

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Call Option [Investments]

The right to buy the underlying securities at a specified exercise price on or before a specified expiration date.

Callable Bonds [Investments]

Bonds that give the issuer the right to redeem the bonds before their stated maturity.

Capital Gain [Investments]

The amount by which the proceeds from the sale of a capital asset exceed its original purchase price.

Capital gain [Loans]

The profit you make when you sell an asset for more than its cost.

Capital Markets [Investments]

The market in which long-term securities such as stocks and bonds are bought and sold.

Cash value [Insurance]

The amount of money, before adjustments for factors such as loans that the policy owner will receive if a permanent life insurance policy is cancelled before the insured's death. Also known as cash surrender value.

Central Clearing and Settlement System (CCASS) [Investments]

The automated system employed by the Hong Kong Securities Clearing Company Limited (HKSCC) for the clearance and settlement of securities transactions.

Central Money Market Units [Investments]

An electronic depositions and clearing system operated by The Hong Kong Monetary Authority which acts as the clearing agent and central custodian for Exchange Fund paper and other debt instruments.

Certificate of Deposits (CDs) [Investments]

Savings instrument in which funds must remain on deposit for a specified period, and premature withdrawals incur interest penalties.

Certificate of insurance [Insurance]

A document that describes the coverage provided by a group insurance policy and that is distributed by the group policyholder to the insured member.

China Concepts Stock [Investments]

A stock in a company whose assets or earnings have significant exposure in China.

Claim [Insurance]

Payments made subject to terms and conditions indicated in the policy.

Closed-end (Mutual) Fund [Investments]

A fund with a fixed number of shares issued, and all trading is done between investors in the open market. The share prices are determined.

Collateral [Investments]

A specific asset pledged against possible default on a bond. Mortgage bonds are backed by claims on property. Collateral trusts bonds are backed by claims on other securities. Equipment obligation bonds are backed by claims on equipment.

Commercial Paper [Investments]

Short-term and unsecured promissory notes issued by corporations with very high credit standings.

Common Stock [Investments]

Equity investment representing ownership in a corporation; each share represents a fractional ownership interest in the firm.

Compound Interest [Investments]

Interest paid not only on the initial deposit but also on any interest accumulated from one period to the next.

Contract of indemnity [Insurance]

Property insurance that restores the insured to his original financial condition after suffering the loss. The idea is that the insured cannot profit from his misfortune. Personal Accident Insurance, where a pre-agreed lump sum payment is made, is not a Contract of Indemnity.

Consequential loss [Insurance]

Financial loss that results from, and in addition to, material damage.

Contract Note [Investments]

A note which must accompany every security transaction which contains information such as the dealer's name (whether he is acting as principal or agent) and the date of contract.

Contribution [Insurance]

The principle whereby if two or more insurers indemnify the insured for the same subject matter against the same risk on behalf of the same interest, they share the loss of liability proportionately. An insured cannot make a profit from a loss by recovering more than one property or pecuniary insurance policy. Contribution only arises when policies cover:
1. the same loss or damage by the same insured peril;
2. the same subject matter;
3. the same interest of the same insured.

Contributory negligence [Insurance]

A principle of law recognising that injured persons may have contributed to their own injury. For example, by agreeing to be a passenger in a car being driven by someone that you know to be drunk. If you are subsequently injured you may be said to have been contributory negligent.

Contributory plan [Insurance]

A group insurance plan under which insured group members must contribute some or all of the premium for their coverage.

A retirement plan that requires plan participants to make contributions to fund the plan.

Controlling Shareholder [Investments]

Any person who is, or group of persons who together are, entitled to exercise or control the exercise of 35% (or such lower amount as may from time to time be specified in the Hong Kong Codes on Takeovers and Mergers and Share Repurchases as being the level for triggering a mandatory general offer) or more of the voting power at general meetings of the issuer, or who is or are in a position to control the composition of a majority of the board of directors of the issuer.

Convertible Bond [Investments]

A bond with an option, allowing the bondholder to exchange the bond for a specified number of shares of common stock in the firm. A conversion price is the specified value of the shares for which the bond may be exchanged. The conversion premium is the excess of the bond's value over the conversion price.

Convertible term insurance [Insurance]

A term life insurance policy that gives the policy owner the right to convert the policy to a permanent plan of insurance.

Cooling-off period [Insurance]

The period during which the policyholder has the right to terminate the policy. It gives the purchasers of new life insurance policies a chance to re-think their decisions to purchase a life insurance plan which is a long-term commitment.

Corporate Bond[Investments]

Long-term debt issued by private corporations.

Coupon [Investments]

The feature on a bond that defines the amount of annual interest income.

Coupon Frequency [Investments]

The number of coupon payments per year.

Coupon Rate [Investments]

The annual rate of interest on the bond's face value that a bond's issuer promises to pay the bondholder. It is the bond's interest payment per dollar of par value.

Cover [Insurance]

Terms and conditions provided by your policy.

Cover note (conditional receipt) [Insurance]

An interim document that serves as proof of the granting of insurance cover.

Covered Warrants [Investments]

Derivative call warrants on shares which have been separately deposited by the issuer so that they are available for delivery upon exercise.

Credit Rating [Investments]

An assessment of the likelihood of an individual or business being able to meet its financial obligations. Credit ratings are provided by credit agencies or rating agencies to verify the financial strength of the issuer for investors.

Currency Board [Investments]

A monetary system in which the monetary base is fully backed by foreign reserves. Any changes in the size of the monetary base has to be fully matched by corresponding changes in the foreign reserves.

Current Yield [Investments]

A return measure that indicates the amount of current income a bond provides relative to its market price. It is shown as: Coupon Rate divided by Price multiplied by 100%.

Custody of Securities [Investments]

Registration of securities in the name of the person to whom the dealer is accountable, or in the name of the dealer's nominee; plus deposition of securities in a designated account with the dealer's bankers or with any other institution providing custodial services to the Securities and Futures Commission's satisfaction.

Customer protection declaration form [Insurance]

A form must be completed when he agrees to purchase a new policy in replacing the existing one. The declaration form reminds the buyer that he is fully aware of any real or potential replacement disadvantages and losses or has been given an explanation as to why no disadvantage or loss exists.

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Decreasing term insurance [Insurance]

A term life insurance policy that provides death benefit decreasing over the term of coverage.

Deductible [Insurance]

Sometimes called an "Excess", it refers to the amount of your claim that you yourself must pay before your insurance cover will operate. Sometimes this deductible is imposed by insurers because of the nature of the risk and in other cases it is voluntary and premium reduction can be allowed.

Default Risk [Investments]

The possibility that a bond issuer will default ie, fail to repay principal and interest in a timely manner.

Defined benefit plan [Insurance]

A pension plan that defines the amount of the benefit that a participant will receive at retirement.

Defined contribution plan [Insurance]

A pension plan that describes the annual contribution the employer will deposit into the plan on behalf of each plan participant.

Derivative Call (Put) Warrants [Investments]

Warrants issued by a third party which grant the holder the right to buy (sell) the shares of a listed company at a specified price.

Derivative Instrument [Investments]

Financial instrument whose value depends on the value of another asset.

Direct Business [Investments]

A transaction effected on the Stock Exchange of Hong Kong (SEHK) in which a SEHK member acts for both buyer and seller.

Discount Bond [Investments]

A bond selling below par, as interest in-lieu to the bondholders.

Diversification [Investments]

The inclusion of a number of different investment vehicles in a portfolio in order to increase returns or be exposed to less risk.

Double indemnity [Insurance]

A provision in a life or personal accident policy whereby benefits will be doubled if a claim arises from a particular cause.

Down payment [Loans]

The money paid up front on the purchase of a property at the beginning of a loan term.

Drawdown [Loans]

The last step of obtaining the loan from the bank, usually the bank will credit the money you borrowed to your account.

Duration [Investments]

A measure of bond price volatility, it captures both price and reinvestment risks to indicate how a bond will react to different interest rate environments.

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Earnings [Investments]

The total profits of a company after taxation and interest.

Earnings per Share (EPS) [Investments]

The amount of annual earnings available to common stockholders as stated on a per share basis.

Earnings Yield [Investments]

The ratio of earnings to price (E/P). The reciprocal is price earnings ratio (P/E).

Endorsements [Insurance]

Any writing on a policy in addition to its normal wording.

Endowment insurance [Insurance]

A type of life insurance that provides a specified benefit amount whether the insured lives to the end of the term of coverage or dies during that term.

Equity [Loans]

The difference between the price at which an asset can be sold, minus the total debt listed against it.

Equity [Investments]

Ownership of the company in the form of shares of common stock.

Equity Call Warrants [Investments]

Warrants issued by a company which give the holder the right to acquire new shares in that company at a specified price and for a specified period of time.

Ex-dividend (XD) [Investments]

A security which no longer carries the right to the most recently declared dividend or the period of time between the announcement of the dividend and the payment (usually two days before the record date). For transactions during the ex-dividend period, the seller will receive the dividend, not the buyer. Ex-dividend status is usually indicated in newspapers with an (x) next to the stock's or unit trust's name.

Exceptions [Insurance]

Sometimes known as Exclusion, these are designed to limit the insurer's risk and can be found in the small print of policies. Notable examples would be the exclusion of war risks and nuclear damage, property covered by other insurance, etc.

Excess [Insurance]

EXCESS / DEDUCTIBLE
The amount of your claim you have to pay before your insurance cover kicks in. See Deductible.

Exclusion [Insurance]

See Exceptions.

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Face Value/ Nominal Value [Investments]

The value of a financial instrument as stated on the instrument. Interest is calculated on face/nominal value.

Firewall [Security & Fraud]

A firewall is a small program that helps to protect your computer and its contents from outsiders on the Internet or network. When properly installed, it prevents unauthorised traffic to and from your PC. There are many effective programs to choose from. Common commercial examples are from Zone Labs , Symantec (Norton), McAfee and Computer Associates. In many cases there is a freeware version of commercial software that is free of charge for personal users.

Fixed-income Securities [Investments]

Investment vehicles that offer a fixed periodic return.

Fixed Rate Bonds [Investments]

Bonds bearing fixed interest payments until maturity date.

Fixed rate loan [Loans]

A loan taken at an interest rate which is fixed for a set term, regardless of changes in the market.

Floating Rate Bonds [Investments]

Bonds bearing interest payments that are tied to current interest rates.

Franchise [Insurance]

If a policy features a franchise figure; the agreed claim is then paid in full. Time franchises may also be used particularly for machinery breakdown covers.

Fundamental Analysis [Investments]

Research to predict stock value that focuses on such determinants as earnings and dividends prospects, expectations for future interest rates and risk evaluation of the firm.

Future Value [Investments]

The amount to which a current deposit will grow over a period of time when it is placed in an account paying compound interest.

Future Value of an Annuity [Investments]

The amount to which a stream of equal cash flows that occur in equal intervals will grow over a period of time when it is placed in an account paying compound interest.

Futures Contract [Investments]

A commitment to deliver a certain amount of some specified item at some specified date in the future.

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Guarantor [Loans]

A person, usually related to the borrower, who guarantees that the loan is fully repaid.

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Hang Seng China Enterprises Index [Investments]

All H-Share companies listed on the Stock Exchange of Hong Kong are included in the Hang Seng China Enterprise Index to reflect the stock price performance of companies listed in Hong Kong and incorporated in mainland China.

Hang Seng Index (HSI) [Investments]

The Hang Seng Index is capitalisation-weighted index of 33 companies that represent approximately 70 per cent of the total market capitalisation of the Stock Exchange of Hong Kong.

Hang Seng London Reference Index (HSLRI) [Investments]

A value-weighted index of Hong Kong companies listed on The London Stock Exchange.

Hedge [Investments]

A combination of two or more securities into a single investment position for the purpose of reducing or eliminating risk.

Hong Kong Inter-Bank Offered Rate (HIBOR) [Investments]

Rate that most creditworthy banks charge one another for large loans of Hong Kong dollars in the Hong Kong market.

Hong Kong Monetary Authority (HKMA) [Investments]

The statutory body established in 1993 that has the responsibility of maintaining currency stability, managing the Exchange Fund, and regulating banks and other authorized institutions.

Hong Kong Securities Clearing Company Ltd. (HKSCC) [Investments]

The recognised clearing house that operates Hong Kong's central securities clearing system (CCASS).

H-Share [Investments]

The share of a Chinese enterprise listed directly on the Stock Exchange of Hong Kong.

HSI Futures Contract [Investments]

Futures contracts settled in cash according to the closing value of the Hang Seng Index.

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Income [Investments]

The amount of money an individual receives in a particular time period.

Index Fund [Investments]

A mutual fund that holds shares in proportion to their representation in a market index, such as Hang Seng Index, S&P 500.

Incontestability provision [Insurance]

A life and health insurance policy wording that provides a time limit on the insurer's right to dispute a policy's validity based on material misstatements in the application.

Initial Public Offering (IPO) [Investments]

An event where a company sells its shares to the public for the first time. The company can be referred to as an IPO for a period of time after the event.

Inside Information [Investments]

Non-public knowledge about a company possessed by its officers, major owners, or other individuals with privileged access to information.

Insider Trading [Investments]

The illegal use of non-public information about a company to make profitable securities transactions.

Insurable interest [Insurance]

In order to recover from an insurance policy the insured must stand in some legally recognised relationship to the subject matter of the policy, whereby he benefits from its safekeeping or is prejudiced by its loss. In property and pecuniary insurance, insurable interest can arise through option or obligation to insure.

Interest [Loans]

A charge for money advanced or lent by the lender.

Intermediary [Insurance]

A person who arranges insurance, whether an insurance agent, broker or consultant.

Intrinsic Value [Investments]

The difference of the exercise price over the market price of the underlying asset.

Investment [Investments]

A vehicle for funds expected to increase its value and/or generate positive returns.

Investment Adviser [Investments]

A person who carries on a business in Hong Kong which provides investment advice with respect to securities and is registered with the Securities and Futures Commission as an investment adviser.

IPO price [Investments]

The price of share set before being traded on the stock exchange. Once the company has gone Initial Public Offering, the stock price is determined by supply and demand.

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Juvenile insurance policy [Insurance]

An insurance policy that is issued on the life of a child but is owned and paid for by an adult.

Junk Bond [Investments]

High-risk securities that have received low ratings (ie, Standard & Poor's BBB rating or below; or Moody's BBB rating or below) and as such, produce high yields, so long as they do not go into default.

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Level term insurance [Insurance]

A term life insurance policy that provides a death benefit that remains the same over the term of coverage.

Leverage Ratio [Investments]

Financial ratios that measure the amount of debt being used to support operations and the ability of the firm to service its debt.

Levy [Insurance]

For compensation and motor insurance, each policy holder is required to pay a levy in addition to the premium.

Liabilities [Loans]

Your outstanding debts, or what you owe.

Limit Order [Investments]

An order to buy (sell) securities which specifies the highest (lowest) price at which the order is to be transacted.

Limited Company [Investments]

The passive investors in a partnership, who supply most of the capital and have liability limited to the amount of their capital contributions.

Limits of liability [Insurance]

Liability policies normally contain a Limit of Liability stating the maximum amount insurers will pay for a particular event. This limit usually applies to the total of all claims arising out of a single event. Some policies will also have a limit set for each policy period.

Liquidity [Investments]

The ability to convert an investment into cash quickly and with little or no loss in value.

Listing [Investments]

Quotation of the Initial Public Offering company's shares on the stock exchange for public trading.

Listing Date [Investments]

The date on which Initial Public Offering stocks are first traded on the stock exchange by the public.

Loan repayment capacity [Loans]

Your monthly loan repayments divided by your gross income expressed as a percentage.

Loan to valuation ratio [Loans]

Your loan amount divided by the bank's valuation of your assets expressed as a percentage.

Loss adjuster [Insurance]

A person employed in professional capacity in the negotiation and settlement of claims.

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Malicious damage [Insurance]

This is an optional Additional Peril you can insure against under a Fire policy and it is taken together with cover against damage caused by riot and strike. Cover against malicious damage insures you against damage caused by "malicious persons". However, such damage excludes malicious break-ins, which are covered under a Burglary / Theft policy. An arson fire would be covered under the standard Fire policy unless it was started by the insured, of course.

Margin Call [Investments]

A notice to a customer that he/she must provide money to satisfy a minimum margin requirement set by the Exchange or by the broking firm.

Market Capitalisation [Investments]

The product of the number of the company's outstanding ordinary shares and the market price of each share.

Market Maker [Investments]

A dealer who maintains an inventory in one or more stocks and undertakes to make continuous two-sided quotes.

Market Order [Investments]

An order to buy or an order to sell securities which is to be executed at the prevailing market price.

Material changes [Insurance]

Changes in circumstances that affect the risk.

Material fact [Insurance]

Anyone seeking insurance must disclose all the material facts about the risk involved that he or she knows, or that they ought to know. In other words, the insured should not hide anything. The trouble is certain facts that the underwriter may deem "material" may not always be known to the insured person. The best principle to follow is: "If in doubt, mention it anyway." If you are not sure whether some other piece of information may or may not be relevant, tell your insurers anyway.

Maturity [Insurance]

The end of the term of an endowment policy.

Maturity date [Insurance]

1. The date on which an endowment insurance policy's face amount will be paid to the policy owner if the insured is still living.
2. The date on which an insurer begins to pay periodic benefits under an annuity. Also known as annuity date.

Money Market [Investments]

Market in which short-term securities are bought and sold.

Mutual Fund [Investments]

A company that invests in and professionally manages a diversified portfolio of securities and sells shares of the portfolio to investors.

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Named peril policy [Insurance]

Such a policy specifies what perils are covered, whereas an All Risks policy would automatically cover anything not specifically excluded.

Negligence [Insurance]

This is the most common form of breach of duty towards third parties under Common Law (also known as Tort). It is the failure to do something that a reasonable person would have done under the same circumstances, or alternatively an action which a "reasonable" person would not have done. No-claim discount - with some policies, such as motor insurance and accident insurance, you will get a discount on your premiums if you make no claims within a given period. The discounts will be higher as the period becomes longer.

Net Asset Value [Investments]

The underlying value of a share of stock in a particular mutual fund; also used with preferred stock.

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Offer for Sale [Investments]

An offer to the public by, or on behalf of, the holders of securities already in issue.

Offer for Subscription [Investments]

The offer of new securities to the public by the issuer or by someone on behalf of the issuer.

Open-end (Mutual) Fund [Investments]

There is no limit to the number of shares the fund can issue. The fund issues new shares of stock and fills the purchase order with those new shares. Investors buy their shares from, and sell them back to, the mutual fund itself. The share prices are determined by their net asset value.

Open Offer [Investments]

An offer to current holders of securities to subscribe for securities whether or not in proportion to their existing holdings.

Option [Investments]

A security that gives the holder the right to buy or sell a certain amount of an underlying financial asset at a specified price for a specified period of time.

Oversubscribed [Investments]

When an Initial Public Offering has more applications than actual shares available. Investors will often apply for more shares than required in anticipation of only receiving a fraction of the requested number. Investors and underwriters will often look to see if an IPO is oversubscribed as an indication of the public's perception of the business potential of the IPO company.

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Paid-up policy [Insurance]

An insurance policy that requires no further premium payments.

Par Bond [Investments]

A bond selling at par (ie, at its face value).

Par Value [Investments]

The face value of a security.

Perils [Insurance]

Under a Fire or Consequential Loss policy, the inclusion of Additional Perils cover protects the insured person against damage caused by, among other things, explosions, riots and strikes, malicious damage, aircraft, impact by road vehicles, burst pipes or "acts of nature" such as storms, floods and earthquakes.

Perpetual Bonds [Investments]

Bonds which have no maturity date.

Permanent life insurance [Insurance]

A type of life insurance that provides coverage throughout the insured's lifetime and also provides a savings element that builds a cash value.

Personal liability [Insurance]

Hopefully, this will not happen to many of us, but in the course of our lives, there are many things we may be liable for, although quite unintended on our part. For instance, we may, by some silly accident, poke someone's eye out with an umbrella. Such an incident must, of course, result in some tangle with the law. Personal Liability coverage helps us pay for the compensation due after such accidents. Most good quality Personal Lines package policies would cover this sort of event.

Placing [Investments]

Obtaining subscriptions for, or the sale of, primary market, where the new securities of issuing companies are initially sold.

Policy [Insurance]

A document setting out the terms of a contract to insure.

Policy withdrawal provision [Insurance]

A policy provision that permits the owner of universal life insurance policy or a deferred annuity policy to withdraw moneys from the policy's accumulated cash value. Also known as partial surrender provision.

Portfolio [Investments]

A collection of investment vehicles assembled to meet one or more investment goals.

Preference Shares [Investments]

A corporate security that pays a fixed dividend each period. It is senior to ordinary shares but junior to bonds in its claims on corporate income and assets in case of bankruptcy.

Premium [Insurance]

A specified amount of money that the insurer receives in exchange for its promise to provide protection against the insured event(s).

Premium (Warrants) [Investments]

The difference of the market price of a warrant over its intrinsic value.

Premium Bond [Investments]

Bond selling above par.

Present Value [Investments]

The amount to which a future deposit will discount back to present when it is depreciated in an account paying compound interest.

Present Value of an Annuity [Investments]

The amount to which a stream of equal cash flows that occur in equal intervals will discount back to present when it is depreciated in an account paying compound interest.

Price/Earnings Ratio (P/E) [Investments]

The measure to determine how the market is pricing the company's common stock. The price/earnings (P/E) ratio relates the company's earnings per share (EPS) to the market price of its stock.

Primary beneficiary [Insurance]

The party designated to receive the proceeds of a life insurance policy following the death of the insured. Also known as first beneficiary.

Principal [Loans]

The actual amount borrowed.

Privatisation [Investments]

The sale of government-owned equity in nationalised industry or other commercial enterprises to private investors.

Professional Conduct Regulations [Investments]

Requirements which the Stock Exchange of Hong Kong members must follow when dealing in securities.

Prospectus [Investments]

A detailed report published by the Initial Public Offering company, which includes all terms and conditions, application procedures, IPO prices etc, for the IPO.

Public liability [Insurance]

You can use this type of policy to insure your business against legal liability for body injury to third parties or loss of, or damage to, the third party property.

Put Option [Investments]

The right to sell the underlying securities at a specified exercise price on of before a specified expiration date.

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Rate of Return [Investments]

A percentage showing the amount of investment gain or loss against the initial investment.

Real Interest Rate [Investments]

The net interest rate over the inflation rate. The growth rate of purchasing power derived from an investment.

Red Chip [Investments]

A company incorporated and listed in Hong Kong whose controlling shareholders are Chinese entities.

Redemption Value [Investments]

The value of a bond when redeemed.

Reinvestment Value [Investments]

The rate at which an investor assumes interest payments made on a bond which can be reinvested over the life of that security.

Relative Strength Index (RSI) [Investments]

A stock's price that changes over a period of time relative to that of a market index such as the Standard & Poor's 500, usually measured on a scale from 1 to 100, 1 being the worst and 100 being the best.

Repurchase Agreement [Investments]

An arrangement in which a security is sold and later bought back at an agreed price and time.

Resistance Level [Investments]

A price at which sellers consistently outnumber buyers, preventing further price rises.

Return [Investments]

Amount of investment gain or loss.

Rights Issue [Investments]

An offer by way of rights to current holders of securities that allows them to subscribe for securities in proportion to their existing holdings.

Risk-Averse, Risk-Neutral, Risk-Taking [Investments]

Risk-averse describes an investor who requires greater return in exchange for greater risk.
Risk-neutral describes an investor who does not require greater return in exchange for greater risk.
Risk-taking describes an investor who will accept a lower return in exchange for greater risk.

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Secure Sessions [Security & Fraud]

When you log in to Internet Banking you are said to be in a "secure session". SSL technology is used within your Internet Banking session to encrypt information before it leaves your computer, in order to ensure that no one else can read it. Depending on your browser settings, a pop-up window may appear to notify you that you will be entering a secure page. You will know that you are on a 'secure' page when you see the 'https://' before the web address. You will also see a closed padlock symbol in the lower right hand corner of your browser window.

Securities and Futures Commission (SFC) [Investments]

The statutory body established in 1989 under the Securities and Futures Commission Ordinance that is responsible for, among other things, the regulation of the securities and futures industry in Hong Kong.

Securities Dealers' Representatives [Investments]

An employee of a securities dealer who performs any of the functions of a securities representative dealer and is registered with the Securities and Futures Commission as a securities representative.

Security [Loans]

Assets pledged to ensure the repayment of a loan.

Security Vulnerabilities [Security & Fraud]

Security holes/bugs are faults, defects or programming errors. These may be exploited by unauthorised users to access computer networks or web servers from the Internet. As these vulnerabilities become known, software publishers develop 'patches,' 'fixes' or 'updates' that you can download to fix the problems.

SEHK [Investments]

See The Stock Exchange of Hong Kong.

Senior Bond [Investments]

A bond that has priority over other bonds in claiming assets and dividends.

Session Time-out [Security & Fraud]

This is an automatic disconnection, for security reasons, from any secure session after a period of server inactivity. It may occur even if you are typing something into a page or data field, the event being triggered by no communications with our servers, rather than by keyboard or mouse inactivity. All our Internet banking services have this protection.

Short Hedge [Investments]

A transaction that protects the value of an asset held by taking a short position in a futures contract.

Settlement [Investments]

Conclusion of a securities transaction when a customer pays a broker/dealer for securities purchased or delivered, securities sold, and receives from the broker the proceeds of a sale.

Short Position [Investments]

Investors sell securities in the hope that they will decrease in value and can be bought at a later date for profit.

Short Selling [Investments]

The sale of borrowed securities, their eventual repurchase by the short seller at a lower price and their return to the lender.

Spam [Security & Fraud]

Unwanted email messages offering products and services of dubious benefit are often called Spam. Various types of anti-spam software are available, but the first line of defence may be your own Internet Service Provider, many of whom offer spam filtering services.

Speculation [Investments]

The process of buying investment vehicles in which the future value and level of expected earnings are highly uncertain.

Spyware [Security & Fraud]

It is a computer software that is installed surreptitiously on a personal computer to intercept or take partial control over the user's interaction with the computer without user's informed consent. Spyware programs will not only secretly monitors user's behavior, they can collect various types of personal information, such as Internet surfing habit and websites that have been visited. It can also interfere with user control of the computer in various ways, such as installing additional software, redirecting Web browser activity and accessing websites blindly which would attract more harmful virus infections, and divert advertising revenue to a third party. Spyware can even change computer settings.

SSL [Security & Fraud]

Secure Socket Layer (SSL) protocol provides a high level of security for Internet communications. SSL provides an encrypted communications session between your web browser and a web server. SSL helps to ensure that sensitive information (e.g. credit card numbers, account balances and other proprietary financial and personal data) sent over the Internet between your browser and a web server remains confidential during online transactions.

Standard risks [Insurance]

The risk category that is composed of proposed insured who has a likelihood of loss not significantly greater that average.

Stock Splits [Investments]

Wholesale changes in the number of shares. For example, a two for one split doubles the number of shares but does not change the share capital.

Subordinated Bond [Investments]

An issue that ranks after secured debt, debenture, and other bonds, and after some general creditors in its claim on assets and earnings. Owners of this kind of bond stand last in line among creditors, but before equity holders, when an issuer fails financially.

Substandard risks [Insurance]

The risk category that is composed of proposed insured who has a significantly great-than-average likelihood of loss. Also known as special class risks.

Substantial Shareholder [Investments]

A person acquires an interest in relevant share capital equal to, or exceeding, 10% of the share capital.

Suicide exclusion provision [Insurance]

A life insurance policy provision that governs the payment of policy proceeds if the insured dies as a result of suicide.

Sum insured [Insurance]

The sum expressed in a policy as the maximum of the insurer's liability under an insurance that gives indemnity or the amount payable by way of benefit in other insurance such as life.

Support Level [Investments]

A price at which buyers consistently outnumber sellers, preventing further price falls.

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Technical Analysis [Investments]

A method of evaluating securities by relying on the assumption that market data, such as charts of price, volume, and open interest, can help predict future (usually short-term) market trends. Contrasted with fundamental analysis which involves the study of financial accounts and other information about the company. (It is an attempt to predict movements in security prices from their trading volume history.)

Term life insurance [Insurance]

A type of life insurance that provides a death benefit if the insured dies during a specified period.

Term/Tenure [Loans]

The length of time of a loan.

Third party [Insurance]

Any person who is not a party in a contract of insurance.

Time Horizon [Investments]

The duration of time an investment is intended for.

The Stock Exchange of Hong Kong Limited (SEHK) [Investments]

The exchange company recognised by the Securities and Futures Commission to establish, operate and maintain a stock market in Hong Kong.

Third party liability / Public liability [Insurance]

Exactly the same as Public Liability Insurance, involving three parties - the insured as first party, the insurer as second party, and the other person involved as third party.

Total and permanent disability [Insurance]

A disability that is defined in a disability income policy and that entitles the insured to receive disability income benefits. Usually the insured is unable to engage in any gainful occupation.

Trading Hours of the Stock Exchange of Hong Kong [Investments]

The official dealing hours of the Stock Exchange of Hong Kong are from 9:30 am to 12:00 noon and 1:00 pm to 4:00 pm every Monday to Friday. Pre-opening Session starts from 9:00am to 9:30 am.

Trading Rules [Investments]

Stipulation of parameters for opening and intra-day quotations, permissible spreads according to the prices of securities available for trading and board lot sizes for each security.

Trojan Horse [Security & Fraud]

Any apparently legitimate software that carries an unwanted destructive payload. Typically the payload is a virus that is used by hackers to gain unauthorised access to computer systems.

Trust Deed [Investments]

A formal document that creates a trust. It states the purpose and terms of the name of the trustees and beneficiaries.

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Uncommitted monthly income [Loans]

Your available income after all monthly expenses, including loan repayments, have been deducted from your gross monthly income.

Under-insurance [Insurance]

Insurance that is not adequate in terms of the sum inured to provide for full payment of a loss.

Underlying Security [Investments]

The security subject to being purchased or sold upon exercise of the option contract.

Underwriters [Insurance]

Insurance company employees who are responsible for identifying and classifying the degree of risk represented by a proposed insured.

Underwriting [Insurance]

The process of identifying and classifying the degree of risk represented by a proposed insured. Also known as selection of risks.

Unified Exchange Compensation Fund Scheme [Investments]

Compensation fund which covers direct claims from investors.

Utmost good faith [Insurance]

As one party to a proposed insurance contract (the insurer) relies upon the other party (the insured) for information about the risk, the rule of utmost good faith applies. This is a duty upon the proposed risk. A material fact is one which would influence the mind of a prudent underwriter in deciding whether to accept a risk and what terms to apply.

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Valuation [Investments]

Process by which an investor determines the worth of a security using risk and return concept.

Virus [Security & Fraud]

A computer program designed to replicate itself by copying itself into other programs stored in a computer and cause computer interruption such as slowing a computer or corrupting a computer's memory and files. Viruses are now mainly spread by email and by file sharing services. New viruses are discovered on a daily basis.

Virus Definition File [Security & Fraud]

This is a file used by anti-virus software to identify specific viruses, worms and trojan horses. For this reason you should regularly download the latest version from your software supplier, or set your software to "auto-update".

Void [Insurance]

Without legal effect.

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Waiver of premium for disability benefit [Insurance]

It provides that the insurer will waive payment of the policy's premiums if the insured becomes unable to work because of an accident or injury.

Waiver of premium for payor benefit [Insurance]

It provides that the insurer will waive payment of the policy's premiums if the adult policy owner dies or becomes disabled.

Warrant [Investments]

An option for a longer period of time giving the buyer the right to buy a number of shares of common stock in company at a specified price for a specified period of time.

Whole life insurance [Insurance]

A form of permanent life insurance that provides life time insurance coverage at a level premium rate and builds a cash value.

Window Dressing [Investments]

Financial adjustments made solely for the purpose of accounting presentation, normally at the time of auditing of company accounts.

Worm [Security & Fraud]

A malicious program that replicates itself until it fills all of the storage space on a drive or network. Such Worms may use up computer time, space, and speed when replicating, with a malicious intent to slow or bring down entire web servers and disrupt Internet use.

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Yearly renewable term [Insurance]

Term life insurance that gives the policy owner the right to renew the coverage each year, over a specified period of time.

Yield (Internal rate of Return) [Investments]

The compound annual rate of return earned by an investment.

Yield to Maturity [Investments]

The rate of return yield by a bond held to maturity when both compound interest payments and the investor's capital gain or loss on the security are taken into account.

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Zero Coupon Bond [Investments]

A bond with no coupon that is sold at a deep discount from par value.